Vietnam’s Central Bank Imports Gold to Bolster Official Reserves

By Bloomberg News -
May 6, 2013

Vietnam’s central bank said it
imported gold to make up for a reduction in reserves from sales
to local commercial banks.

The purchases were equivalent to the amount sold at the
auctions, the State Bank of Vietnam said in a statement on its
website today, without giving details. The bank sold 367,000
taels in 13 auctions held from March 28 through May 3, it said.
A tael is about 1.2 ounces. The auctions were held mainly to
supply gold to banks that need to return about 20 metric tons to
depositors by the end of June, the statement said.

The central bank in October ordered lenders to stop taking
gold deposits from customers starting June 30. The bank needs to
control the gold market to stabilize the dong, the country’s
currency, Governor Nguyen Van Binh said in an interview posted
on the government’s website on May 5.

“Previously, each year the amount of gold imported into
Vietnam was about 100 tons, which would require a foreign-
currency amount of about $4.4 billion,” the bank said in
today’s statement. “Therefore that had very strong impact on
the increase in the dong-dollar exchange rate, causing
macroeconomic instability.”

The gap between domestic and international gold prices is
still large because supply and demand are still imbalanced in
the short term, the bank said.

Cash gold traded at $1,472.13 an ounce by 9:47 a.m. London
time. The price in Vietnam was 41.82 million dong per tael,
according to data on the Saigon Jewelery Co.’s website. Dong
traded little changed at 20,936 to a dollar.